Extra #2: Kate Rose

Kate Rose,deputy director for health planning and reform implementation at the Illinois Department of Insurance, talks about what's ahead for small and mid-sized businesses as Illinois implements federal health insurance reform.

CRAINS: What are some of the best aspects of health reform for small businesses?

MS. ROSE: There are a couple huge reforms. One is the exchange. Two is the creation of a federal tax cut that really offers opportunity for small businesses to benefit, particularly those with 50 or fewer employees. Some of the specific impacts that we see is the access to tax credits — 35% of the cost of coverage now. And with exchanges in place, that tax credit goes up to 50%, and small employers can have access to the tax credit for a full three years. The additional positives include a greater choice of plans. There's likely going to be — especially through the exchange — more uniform, reliable and understandable information about what coverage provides. There's going to be a lot more administrative burden relieved from small businesses that don't have the back-office power to administer health benefits.

On the tax credits, I've not been able to find many businesses that have taken advantage of them at this point. Many say the rules are too restrictive and the paperwork seems too cumbersome. What have you found?

That's one of the things we hope to find out as part of a prospective project with University of Illinois at Chicago. The feds have not provided us with information on how many businesses in Illinois have been able to take the tax credit.

Some business owners I've talked with say they can't see how health insurance reform will benefit them given that the state is broke.

What we're offering through the exchange is hopefully more affordable coverage, but certainly more consistency in the cost of coverage from one year to the next, which for a business is one of the most important things. One of the things in Illinois where there is broad consensus is that the exchange should not be funded by a revenue source that could be taken away by the General Assembly.

Where is Illinois right now with the discussion over the exchange?

Illinois passed a law in June which provided the authority to establish an exchange but delegated some additional, pretty critical decisions to a legislative study committee. Some of those decisions include defining the governance structure and putting in place a self-sustaining mechanism for the exchange. The study committee put out a report in October, and additional legislation was introduced in the fall veto session but was not taken up. So, I think we expect that the spring session will include some debate of exchange legislation, and it is our hope it will pass at that point.

If the state doesn't pass it, the federal government sets up the exchange for the state?

If we have not established the authority to offer an exchange in Illinois, at least by the end of next year, when the state has to submit its certification application to the feds, then we will not have met the criteria to operate an exchange in Illinois.

Because there is a lot of uncertainty in terms of what an Illinois exchange will look like and whether it will actually go through, what's your best advice for business owners on how to put together their insurance plans today?

My one piece of advice might be to ask their brokers or look on the Internet for plans that include what are the likely minimum requirements to be included in 2014 plans. Coverage that's offered in the Illinois marketplace today is much less comprehensive than what will be offered on the exchange in 2014.

Some small-business owners worry that federal rule changes mean more burdens on them in comparison to large businesses.

I don't agree with that. Small businesses will only see potential positive benefits. They are not subject to the penalty applied to businesses that don't offer coverage, or only offer very limited coverage. Small group coverage in Illinois is incredibly expensive because it is the only market that has requirements around ratings. The small group market is the hardest hit in our state for what they have access to, so I really don't see that they're going to see many negatives.

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